One “smart” trader (smart means insider trader usually) believes positive news is forthcoming soon in Array Biopharma Inc (NASDAQ:ARRY) even on a day of relative market and stock weaknes. On Friday, this “smart” trader just bought 5,140 November 2016 $6.00 calls in ARRY. The majority of those calls, 70% were purchased at the asking price, while 30% were at the bid. While biotech stocks are no stranger to volatility, this is a very unusual, somewhat large call buy for Array Biopharma Inc. (ARRY).
Itt’s never 100% clear what the reasons are when a single trader comes into a specific options contract on a specific stock. However, looking at the earnings calendar, one can see that Array Biopharma is set to announce Q1 2017 earnings on the morning of Wednesday November 2. Clearly this “smart” trader knows something about these results being rather positive, or possibly some other market moving news to be release that day?
Array BioPharma Inc. is a biopharmaceutical company that currently has five clinical studies underway, including three that are to treat patients with a variety of cancers. One of their trials is partnered with Astra Zeneca. Is it possible that positive news on that Astra Zeneca trial is to be released? Anything is possible when a smart money player jumps into a specific ARRY options contract with a large call buy.
Array Biopharma (ARRY) is set to release those surprise Q1 2017 earnings at 9:30 am on November 2.
Array Biopharma (ARRY) showed some weakness Friday afternoon, after the call buy, so maybe it’s possible you can still piggyback on this “smart” money call buy in ARRY? For the day on Friday, ARRY traded down 12 cents, to $5.83. It traded as high as $6.01 thanks to that options player, and as low as $5.72. It’s 52 week low is a dismal $2.38 and a high of $7.27.
The company has just 8 analysts following it currently, with a consensus rating of BUY, and a price target of $9.43. Given it’s current price, and of course, that large call buy a few days before earnings announcement, Array Biopharma (ARRY) may well be a great buy on Monday morning. Or not. Sometimes these insiders get it wrong. But the risk/reward appears favorable on this one.